Wind industry is still clinging onto tax credit

Two months after Congress rescued it, the wind industry’s crucial tax credit is back on the countdown to extinction.

The fiscal cliff deal revived the wind-production tax credit on New Year’s Day just hours after it legally expired. Industry leaders say the extension saved thousands of jobs and will support the installation of thousands of megawatts of power this year.

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But the credit is due to expire again Dec. 31, and opponents are just as eager as before to see it die. The industry wants a long-term extension, but that has near zero odds with the Capitol consumed with talk of budget pain.

Still, an industry can dream. Here’s a look at what wind wants — and how likely it is to get it.

PLAN A: A long-term extension

The industry is looking for long-term certainty rather than the will-they-or-won’t-they prospects of congressional renewal every few years.

“With predictability, the industry can go through additional product-development cycles, if you will — investing in manufacturing, investing in R&D, investing in new products that will further drive down the cost of wind,” said American Wind Energy Association spokesman Peter Kelley.

Industry officials point to the production tax credit’s recent track record: Before the cliff deal, the credit expired in 2004 before Congress stepped in. Since then, installed capacity in the U.S. has ballooned from 9 gigawatts to more than 60 gigawatts. In addition, industry employment has grown; the cost of a turbine has plunged; and a larger percentage of turbine parts is manufactured in the U.S.

Still, the prospects for a long-term extension don’t look good amid general gridlock and strong opposition to the PTC from some Republicans.

In the previous Congress, PTC supporters introduced legislation that would have extended the credit through 2016. That legislation went nowhere.

PLAN B: Long-term phase-out

A more likely scenario is Congress will adopt a phase-out that will ramp down the credit over several years.

The American Wind Energy Association released an analysis in December that identified a phase-out plan that “would sustain a minimally viable industry able to continue achieving cost reductions.”

Under the scenario analyzed by AWEA, the full PTC would have been extended through 2013 followed by 90 percent of the credit in 2014, 80 percent in 2015 and so on until 2019, when the credit would end.

That proposal, however, was largely contingent on Congress approving a broader corporate tax reform. Some wind supporters in Congress don’t see that happening.

“Frankly, I don’t think we’re going to have corporate tax reform,” said Sen. Chuck Grassley (R-Iowa), the author of the original wind credit.

Others are more hopeful. The House Ways and Means Committee has begun holding meetings to talk tax reform.